Bank of Canada expected to raise rates next week, despite rise in unemployment rate
CTV
The Canadian labour market is showing some signs of softening as the unemployment rate rises and wage growth slows, but with another solid job gain in June, forecasters are still expecting an interest rate hike by the Bank of Canada next week.
The Canadian labour market is showing some signs of softening as the unemployment rate rises and wage growth slows, but with another solid job gain in June, forecasters are still expecting an interest rate hike by the Bank of Canada next week.
Statistics Canada reported Friday the economy added 60,000 jobs in June, driven by gains in full-time work.
But as more Canadians searched for work and the population continued to grow, the unemployment rate climbed higher to 5.4 per cent, the highest it's been in more than a year.
"The reason the unemployment rate can rise alongside historically strong employment growth is that population growth continues to set new records -- including an 84k monthly increase in June," wrote RBC assistant chief economist Nathan Janzen in a note to clients.
June marked the second month in a row the unemployment rate has risen as economists watch for softening in the labour market amid high interest rates.
At the same time, employers' hiring appetite bounced back in June after the economy lost 17,000 jobs in May.
"Overall, the job growth that we saw this month puts this report on the positive side, just not anything that we should get excited about," said Brendon Bernard, a senior economist at hiring website Indeed.